The ‘invisible hand’

Written by Brenda Schimke

We tend to forget sometimes just how different and distinct corporations are from the government.  We particularly forget the complexities in decision-making between corporate executives and political leaders. 

A Chief Executive Officer’s (CEO’s) one priority is to produce good quarterly results, whereas a political leader has to balance a myriad of priorities, financial and non-financial, simultaneously.

From a business perspective, strip mining the Rocky Mountains for coal extraction is a marvellous opportunity. It is not the industry’s responsibility to worry about tourism, clean water, the environment or future generations. Industry just lives in the here and now. Whereas governments are responsible to worry about broader concerns.

Therein lies the rub between governments, who work for individuals and societal good, and corporations who work for cold hard cash. That’s why the federal Competition Bureau becomes essential when two major telecoms, Rogers and Shaw, choose to merge.

These two companies argue that their merger will improve competition and lower prices, won’t affect jobs, yet save $2 billion per year in operating costs. To a layperson, their commitments are hard to believe when ‘operating savings’ always mean lost jobs and competitive pricing in the cell phone market is already sadly lacking in Canada.

To date, Canada’s four telecom providers haven’t even been successful in rolling out high-speed internet services to all east central Albertans or other similar rural areas across the country. Why would we believe they are now serious about making a significant difference in northern and First Nations communities?

According to the Globe & Mail business page, the smallest telecom, Shaw, has been out-investing all its larger competitors, Telus, Bell and Rogers, for some years. With Shaw competing to gain market share, they have had the incentive to innovate and invest, whereas Rogers, the top dog, has the incentive to take out the competition.

Rogers and Shaw argue that they would keep Calgary as a critical western hub even as the head office and decision-making moves east. When BC Tel bought out Telus, they too promised Edmonton would have continued executive presence and decision making, but those jobs and any power over decisions were gone within a few years.

Rogers is guaranteeing internet and wireless rates won’t increase for three years. Little comfort when the Canadian public are adamant that we pay too much already, and are demanding rate reductions.

Sometimes mergers do offer better services and lower prices, but it doesn’t come natural as argued by Adam Smith, the father of free markets. His adage, that an ‘invisible hand’ protects consumers so governments should have no say over business transactions, has been proven so wrong so often, that it’s sad so many are still believers.

Government and private businesses play uniquely different roles in a democracy and need to stay in their lanes. 

When governments start nationalizing industries that are profitable and sustainable, governments have gone too far. 

When businesses weld so much power over government legislation and policies that competition for essential services is seriously weakened or the long-term health and safety of citizens is jeopardized, then businesses have gone too far.

Clean water and connectivity are essential services.

Politicians have a tough job, made even tougher by the power of the corporation and its well-financed lobbying efforts that tenuously strive to turn politicians into their stooges. 

It evermore highlights the importance of government institutions, such as the Competition Bureau, which is often the last line of defence in protecting us from Adam Smith’s dysfunctional ‘invisible hand’.


Brenda Schimke

ECA Review

About the author

Brenda Schimke

Schimke is a Graduate with Distinction from the University of Alberta with a BCom degree. She has lived and worked in Alberta, BC and Ontario.